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Stocks In Focus SG (LionGold, Asiasons, Blumont, BreadTalk, Indofood, China Minzhong) – 07/10/13
Trading Halt Requested By LionGold, Asiasons
Asiasons Capital and LionGold Corp has on Monday, 7 October 2013, requested for a halt in the trading of their shares, despite having been lifted the suspension status by the Singapore Exchange (SGX). SGX also lifted suspension of Blumont Group after announcing on Sunday, 6 October 2013, of its intention to lift the suspension on the three companies the next day. The lifting did however come with restrictions, such as including curbs against short-selling and taking on new contra positions. SGX said that it would continue to monitor the trading of those stocks and review circumstances in due course before ending the restrictions. Last Friday, 4 October 2013, the SGX undertook one of the widest ranging interventions in recent memory by query six companies and swiftly suspending three of them (LionGold, Asiasons and Blumont).
Significance: SGX believes that there has been manipulation of the security, excessive speculation in the security, or it is otherwise desirable in the interests of markets established or operated by the SGX. The three stocks opened at less than half of their peaks seen last week on Monday, 7 October 2013.
BreadTalk Sets New Milestone Target
BreadTalk Group, has on Friday, 4 October 2013 laid a milestone target for itself to achieve $1 billion in revenue by 2016, and more than 2,000 bakeries, food courts, and restaurants by 2018. Last year, BreadTalk raked in $447.3 million in revenue last year and has about 850 outlets in 15 countries at current. The new milestone target shows a significant difference from its earlier goal set in September 2012 of having 1,000 BreadTalk bakery outlets by 2014. George Quek, chairman of BreadTalk expressed that of the 2,000 proposed outlets, 1,800 will be accounted for by the BreadTalk brand alone, and China will be a key part of the expansion strategy, where China alone will have about 1,000 of such outlets.
Significance: On the risk of copy cats in China on BreadTalk outlets, Quek expressed that they can copy your first or second generation outlets, but every three to four years, BreadTalk innovates and comes up with a new concept. This will give BreadTalk the edge in every new front before competition saturates. BreadTalk shares have risen 33.8 percent so far this year to 91 cents on Friday, 4 October 2013.
China Minzhong’s Offer By Indofood Not Fair But Reasonable
China Minzhong’s offer by Indofood at $1.12 a share was quoted to be “not fair but reasonable”, according to the independent financial adviser appointed by China Minzhong’s directors. PricewaterhouseCoopers Corporate Finance (PwCCF), said the offer was “not fair”. The offer price is at a discount to the company’s latest unaudited net asset value per share and has a lower premium to its range of volume weighted average prices compared to other successful delisting and privatisation deals in the 12 months before the offer. On the advice of PwCCF however, China Minzhong’s board has recommended to shareholders who wish to realise their investments but are unable to sell their shares in the open market for more than the offer price, or are uncertain of the company’s longer term performance, to accept Indofood’s offer. On the contrary, the board also recommended that shareholders who think they will be able to realise more value from holding on to its shares, should reject the offer.
Significance: The offer, though “not fair” is reasonable as the valuation ratios based on the offer price are in line with those based on arm’s length transactions involving China Minzhong’s shares and share issuance in the 12 months before Indofood’s offer, and the premia of the offer price over previously transacted prices are also in line with that of previous non privatisation takeovers.
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